Republic Act No.
7942: Philippine Mining Act of 1995 (h) "Co-production agreement (CA)" means an
Sec. 2 Declaration of Policy. All mineral resources in
public and private lands within the territory and
exclusive economic zone of the Republic of the
Philippines are owned by the State. It shall be the
responsibility of the State to promote their rational
exploration, development, utilization and conservation
through the combined efforts of government and the
private sector in order to enhance national growth in a
way that effectively safeguards the environment and
protect the rights of affected communities.
 
Sec. 3 Definition of Terms. As used in and for purposes
of this Act, the following terms, whether in singular or
plural, shall mean:
(a) "Ancestral lands" refers to all lands, exclusively and
actually possessed, occupied, or utilized by indigenous
cultural communities by themselves or through their
ancestors in accordance with their customs and
traditions since time immemorial, and as may be
defined and delineated by law.
 
(b) "Block" or "meridional block" means an area
bounded by one-half (1/2) minute of latitude and one-
half (1/2) minute of longitude, containing approximately
eighty-one hectares (81 has.).
 
(c) "Bureau" means the Mines and Geosciences Bureau
under the Department of Environment and Natural
Resources.
 
(d) "Carrying capacity" refers to the capacity of natural
and human environments to accommodate and absorb
change without experiencing conditions of instability
and attendant degradation.
(e) "Contiguous zone" refers to water, sea bottom and
substratum measured twenty-four nautical miles (24
n.m.) seaward from base line of the Philippine
archipelago.
(f) "Contract area" means land or body of water
delineated for purposes of exploration, development, or
utilization of the minerals found therein.
 
(g) "Contractor" means a qualified person acting alone
or in consortium who is a party to a mineral agreement
or to a financial or technical assistance agreement.
 
agreement entered into between the Government and
one or more contractors in accordance with Section
26(b) hereof.
 
(i) "Department" means the Department of
Environment and Natural Resources.
 
(j) "Development" means the work undertaken to
explore and prepare an ore body or a mineral deposit
for mining, including the construction of necessary
infrastructure and related facilities.
 
(k) "Director" means the Director of the Mines and
Geosciences Bureau.
(l) "Ecological profile or eco-profile" refers to
geographic-based instruments for planners and
decision-makers which presents an evaluation of the
environmental quality and carrying capacity of an area.
 
(m) "Environmental Compliance Certificate (ECC)" refers
to the document issued by the government agency
concerned certifying that the project under
consideration will not bring about an unacceptable
environmental impact and that the proponent has
complied with the requirements of the environmental
impact statement system.
 
(n) "Environmental Impact Statement (EIS)" is the
document which aims to identify, predict, interpret, and
communicate information regarding changes in
environmental quality associated with a proposed
project and which examines the range of alternatives
for the objectives of the proposal and their impact on
the environment.
(o) "Exclusive economic zone" means the water, sea
bottom and subsurface measured from the baseline of
the Philippine archipelago up to two hundred nautical
miles (200 n.m.) offshore.
(p) "Existing mining/quarrying right" means a valid and
subsisting mining claim or permit or quarry permit or
any mining lease contract or agreement covering a
mineralized area granted/issued under pertinent mining
laws.
 
(q) "Exploration" means the searching or prospecting
for mineral resources by geological, geochemical or
geophysical surveys, remote sensing, test pitting,
trenching, drilling, shaft sinking, tunneling or any other
means for the purpose of determining the existence,
extent, quantity and quality thereof and the feasibility
of mining them for profit.
 
(r) "Financial or technical assistance agreement" means
a contract involving financial or technical assistance for
large-scale exploration, development, and utilization of
mineral resources.
 
(s) "Force majeure" means acts or circumstances
beyond the reasonable control of contractor including,
but not limited to, war, rebellion, insurrection, riots,
civil disturbance, blockade, sabotage, embargo, strike,
lockout, any dispute with surface owners and other
labor disputes, epidemic, earthquake, storm, flood or
other adverse weather conditions, explosion, fire,
adverse action by government or by any instrumentality
or subdivision thereof, act of God or any public enemy
and any cause that herein describe over which the
affected party has no reasonable control.
 
(t) "Foreign-owned corporation" means any
corporation, partnership, association, or cooperative
duly registered in accordance with law in which less
than fifty per centum (50%) of the capital is owned by
Filipino citizens.
 
(u) "Government" means the government of the
Republic of the Philippines.
 
(v) "Gross output" means the actual market value of
minerals or mineral products from its mining area as
defined in the National Internal Revenue Code.
 
(w) "Indigenous cultural community" means a group or
tribe of indigenous Filipinos who have continuously
lived as communities on communally-bounded and
defined land since time immemorial and have
succeeded in preserving, maintaining, and sharing
common bonds of languages, customs, traditions, and
other distinctive cultural traits, and as may be defined
and delineated by law.
 
(x) "Joint Venture Agreement (JVA)" means an
agreement entered into between the Government and
one or more contractors in accordance with Section
26(c) hereof.
 
(y) "Mineral processing" means the milling, benefaction
or upgrading of ores or minerals and rocks or by similar
means to convert the same into marketable products.
 
(z) "Mine wastes and tailings" shall mean soil and rock
materials from surface or underground mining and
milling operations with no economic value to the
generator of the same.
 
(aa) "Minerals" refers to all naturally occurring inorganic
substance in solid, gas, liquid, or any intermediate state
excluding energy materials such as coal, petroleum,
natural gas, radioactive materials, and geothermal
energy.
 
(ab) "Mineral agreement" means a contract between
the government and a contractor, involving mineral
production-sharing agreement, co-production
agreement, or joint-venture agreement.
 
(ac) "Mineral land" means any area where mineral
resources are found.
 
(ad) "Mineral resource" means any concentration of
minerals/rocks with potential economic value.
 
(ae) "Mining area" means a portion of the contract area
identified by the contractor for purposes of
development, mining, utilization, and sites for support
facilities or in the immediate vicinity of the mining
operations.
 
(af) "Mining operation" means mining activities
involving exploration, feasibility, development,
utilization, and processing.
 
(ag) "Nongovernmental Organization (NGO)" includes
nonstock, nonprofit organizations involved in activities
dealing with resource and environmental conservation,
management and protection.
 
(ah) "Net assets" refers to the property, plant and
equipment as reflected in the audited financial
statement of the contractor net of depreciation, as
computed for tax purposes, excluding appraisal increase
and construction in progress.
 
(ai) "Offshore" means the water, sea bottom, and
subsurface from the shore or coastline reckoned from
the mean low tide level up to the two hundred nautical
miles (200 n.m.) exclusive economic zone including the
archipelagic sea and contiguous zone.
(aj) "Onshore" means the landward side from the mean
tide elevation, including submerged lands in lakes,
rivers and creeks.
(ak) "Ore" means a naturally occurring substance or
material from which a mineral or element can be mined
and/or processed for profit.
(al) "Permittee" means the holder of an exploration
permit.
 
(am) "Pollution control and infrastructure devices"
refers to infrastructure, machinery, equipment and/or
improvements used for impounding, treating or
neutralizing, precipitating, filtering, conveying and
cleansing mine industrial waste and tailings as well as
eliminating or reducing hazardous effects of solid
particles, chemicals, liquids or other harmful by
products and gases emitted from any facility utilized in
mining operations for their disposal.
 
(an) "President" means the President of the Republic of
the Philippines.
 
(ao) "Private land" refers to any land belonging to any
private person which includes alienable and disposable
land being claimed by a holder, claimant, or occupant
who has already acquired a vested right thereto under
the law, although the corresponding certificate or
evidence of title or patent has not been actually issued.
 
(ap) "Public land" refers to lands of the public domain
which have been classified as agricultural lands and
subject to management and disposition or concession
under existing laws.
 
(aq) "Qualified person" means any citizen of the
Philippines with capacity to contract, or a corporation,
partnership, association, or cooperative organized or
authorized for the purpose of engaging in mining, with
technical and financial capability to undertake mineral
resources development and duly registered in
accordance with law at least sixty per cent (60%) of the
capital of which is owned by citizens of the Philippines:
Provided, That a legally organized foreign-owned
corporation shall be deemed a qualified person for
purposes of granting an exploration permit, financial or
technical assistance agreement or mineral processing
permit.
(ar) "Quarrying" means the process of extracting,
removing and disposing quarry resources found on or
underneath the surface of private or public land.
(as) "Quarry permit" means a document granted to a
qualified person for the extraction and utilization of
quarry resources on public or private lands.
(at) "Quarry resources" refers to any common rock or
other mineral substances as the Director of Mines and
Geosciences Bureau may declare to be quarry resources
such as, but not limited to, andesite, basalt,
conglomerate, coral sand, diatomaceous earth, diorite,
decorative stones, gabbro, granite, limestone, marble,
marl, red burning clays for potteries and bricks, rhyolite,
rock phosphate, sandstone, serpentine, shale, tuff,
volcanic cinders, and volcanic glass: Provided, That such
quarry resources do not contain metals or metallic
constituents and/or other valuable minerals in
economically workable quantities: Provided, further,
That non-metallic minerals such as kaolin, feldspar,
bullquartz, quartz or silica, sand and pebbles, bentonite,
talc, asbestos, barite, gypsum, bauxite, magnesite,
dolomite, mica, precious and semi-precious stones, and
other non-metallic minerals that may later be
discovered and which the Director declares the same to
be of economically workable quantities, shall not be
classified under the category of quarry resources.
 
(au) "Region director" means the regional director of
any mines regional office under the Department of
Environment and Natural Resources.
 
(av) "Regional office" means any of the mines regional
offices of the Department of Environment and Natural
Resources.
 
(aw) "Secretary" means the Secretary of the
Department of Environment and Natural Resources.
 
(ax) "Special allowance" refers to payment to the claim-
owners or surface right-owners particularly during the
transition period from Presidential Decree No. 463 and
Executive Order No. 279, series of 1987.
 
(ay) "State" means the Republic of the Philippines.
 
(az) "Utilization" means the extraction or disposition of
minerals.
 
CHAPTER II
GOVERNMENT MANAGEMENT
 
Sec. 4 Ownership of Mineral Resources. - Mineral
resources are owned by the State and the exploration,
development, utilization, and processing thereof shall
be under its full control and supervision. The State may
directly undertake such activities or it may enter into
mineral agreements with contractors.
The State shall recognize and protect the rights of the
indigenous cultural communities to their ancestral lands
as provided for by the Constitution.
Sec. 5 Mineral Reservations. When the national interest
so requires, such as when there is a need to preserve
strategic raw materials for industries critical to national
development, or certain minerals for scientific, cultural
or ecological value, the President may establish mineral
reservations upon the recommendation of the Director
through the Secretary. Mining operations in existing
mineral reservations and such other reservations as
may thereafter be established, shall be undertaken by
the Department or through a contractor: Provided, That
a small scale mining agreement for a maximum
aggregate area of twenty-five percent (25%) of such
mineral reservation, subject to valid existing mining
quarrying rights as provided under Section 112 Chapter
XX hereof. All submerged lands within the contiguous
zone and in the exclusive economic zone of the
Philippines are hereby declared to be mineral
reservations.
 
A ten per centum (10%) share of all royalties and
revenues to be derived by the government from the
development and utilization of the mineral resources
within mineral reservations as provided under this Act
shall accrue to the Mines and Geosciences Bureau to be
allotted for special projects and other administrative
expenses related to the exploration and development of
other mineral reservations mentioned in Section 6
hereof.
 
Sec. 6 Other Reservations. Mining operations in
reserved lands other than mineral reservations may be
undertaken by the Department, subject to limitations as
herein provided. In the event that the Department
cannot undertake such activities, they may be
undertaken by a qualified person in accordance with the
rules and regulations promulgated by the Secretary. The
right to develop and utilize the minerals found therein
shall be awarded by the President under such terms and
conditions as recommended by the Director and
approved by the Secretary. Provided, That the party
who undertook the exploration of said reservation shall
be given priority. The mineral land so awarded shall be
automatically excluded from the reservation during the
term of the agreement: Provided, further, That the right
of the lessee of a valid mining contract existing within
the reservation at the time of its establishment shall not
be prejudiced or impaired.
Sec. 7 Periodic Review of Existing Mineral Reservations.
The Secretary shall periodically review existing mineral
reservations for the purpose of determining whether
their continued existence is consistent with the national
interest, and upon the recommendation, the President
may, by proclamation, alter or modify the boundaries
thereof or revert the same to the public domain without
prejudice to prior existing rights.
 
Sec. 8 Authority of the Department. The Department
shall be the primary government agency responsible for
the conservation, management, development, and
proper use of the State's mineral resources including
those in reservations, watershed areas, and lands of the
public domain. The Secretary shall have the authority to
enter into mineral agreements on behalf of the
Government upon the recommendation of the Director,
promulgate such rules and regulations as may be
necessary to implement the intent and provisions of this
Act.
 
Sec. 9 Authority of the Bureau. The Bureau shall have
direct charge in the administration and disposition of
mineral lands and mineral resources and shall
undertake geological, mining, metallurgical, chemical,
and other researches as well as geological and mineral
exploration surveys. The Director shall recommend to
the Secretary the granting of mineral agreements to
duly qualified persons and shall monitor the compliance
by the contractor of the terms and conditions of the
mineral agreements. The Bureau may confiscate surety,
performance and guaranty bonds posted through an
order to be promulgated by the Director. The Director
may deputize, when necessary, any member or unit of
the Philippine National Police, barangay, duly registered
nongovernmental organization (NGO) or any qualified
person to police all mining activities.
 
Sec. 10 Regional Offices. There shall be as many regional
offices in the country as may be established by the
Secretary, upon the recommendation of the Director.
 
Sec. 11 Processing of Applications. The system of
processing applications for mining rights shall be
prescribed in the rules and regulations of this Act.
 
Sec. 12 Survey, Charting and Delineation of Mining
Areas. A sketch plan or map of the contract or mining
area prepared by a deputized geodetic engineer
suitable for publication purposes shall be required
during the filing of a mineral agreement or financial or
technical assistance agreement application. Thereafter,
the contract or mining area shall be surveyed and
monumented by a deputized geodetic engineer or
bureau geodetic engineer and the survey plan shall be
approved by the Director before the approval of the
mining feasibility.
 
Sec. 13 Meridional Blocks. For purposes of the
delineation of the contract of mining areas under this
Act, the Philippine territory and its exclusive economic
zone shall be divided into meridional blocks of one-half
(1/2) minute of latitude and one-half (1/2) minute of
longitude.
 
Sec. 14 Recording System. There shall be established a
national and regional filing and recording system. A
mineral resource database system shall be set up in the
Bureau which shall include, among others, a mineral
rights management system. The Bureau shall publish at
least annually, a mineral rights management system.
The Bureau shall publish at least annually, a mineral
gazette of nationwide circulation containing among
others, a current list of mineral rights, their location in
the map, mining rules and regulations, other official acts
affecting mining, and other information relevant to
mineral resources development. A system and
publication fund shall be included in the regular budget
of the Bureau.
 
CHAPTER III
SCOPE OF APPLICATION
 
Sec. 15 Scope of Application. This Act shall govern the
exploration, development, utilization and processing of
all mineral resources.
 
Sec. 16 Opening of Ancestral Lands for Mining
Operations. No ancestral land shall be opened for
mining operations without the prior consent of the
indigenous cultural community concerned.
 
Sec. 17 Royalty Payments for Indigenous Cultural
Communities. In the event of an agreement with an
indigenous cultural community pursuant to the
preceding section, the royalty payment, upon utilization
of the minerals shall be agreed upon by the parties. The
said royalty shall form part of a trust fund for the
socioeconomic well-being of the indigenous cultural
community.
 
Sec. 18 Areas Open to Mining Operations. Subject to
any existing rights or reservations and prior agreements
of all parties, all mineral resources in public or private
lands, including timber or forestlands as defined in
existing laws shall be open to mineral agreements or
financial or technical assistance agreement applications.
Any conflict that may arise under this provision shall be
heard and resolved by the panel of arbitrators.
 
Sec. 19 Areas Closed to Mining Applications. Mineral
agreement or financial or technical assistance
agreement applications shall not be allowed:
 
(a) In military and other government reservations,
except upon prior written clearance by the government
agency concerned;
 
(b) Near or under public or private buildings,
cemeteries, archeological and historic sites, bridges,
highways, waterways, railroads, reservoirs, dams or
other infrastructure projects, public or private works
including plantations or valuable crops, except upon
written consent of the government agency or private
entity concerned;
 
(c) In areas covered by valid and existing mining rights;
 
(d) In areas expressedly prohibited by law;
 
(e) In areas covered by small-scale miners as defined by
law unless with prior consent of the small-scale miners,
in which case a royalty payment upon the utilization of
minerals shall be agreed upon by the parties, said
royalty forming a trust fund for the socioeconomic
development of the community concerned; and
 
(f) Old growth or virgin forests, proclaimed watershed
forest reserves, wilderness areas, mangrove forests,
mossy forests, national parks, provincial/municipal
forests, parks, greenbelts, game refuge and bird
sanctuaries as defined by law in areas expressly
prohibited under the National Integrated Protected
areas System (NIPAS) under Republic Act No. 7586,
Department Administrative Order No. 25, series of 1992
and other laws.
 
CHAPTER IV
EXPLORATION PERMIT
 
Sec. 20 Exploration Permit. An exploration permit grants
the right to conduct exploration for all minerals in
specified areas. The Bureau shall have the authority to
grant an exploration permit to a qualified person.
 
Sec. 21 Terms and Conditions of the Exploration Permit.
An exploration permit shall be for a period of two (2)
years, subject to annual review and relinquishment or
renewal upon the recommendation of the Director.
 
Sec. 22 Maximum Areas for Exploration Permit. The
maximum area that a qualified person may hold at any
one time shall be:
 
(a) Onshore, in any one province -
 
(1) For individuals, twenty (20) blocks; and
(2) (2) For partnerships, corporations, cooperatives, or
associations, two hundred (200) blocks.
 
(b) Onshore, in the entire Philippines -
 
(1) For individuals, forty (40) blocks; and
 
(2) For partnerships, corporations, cooperatives, or
associations, four hundred (400) blocks.
 
(c) Onshore, beyond five hundred meters (500m) from
the mean low tide level -
 
(1) For individuals, one hundred (100) blocks; and
 
(2) For partnerships, corporations, cooperatives, or
associations, one thousand (1,000) blocks.
 
Sec. 23 Rights and Obligations of the Permittee. An
exploration permit shall grant to the permittee, his heirs
or successors-in-interest, the right to enter, occupy and
explore the area: Provided, That if private or other
parties are affected, the permittee shall first discuss
with the said parties the extent, necessity, and manner
of his entry, occupation and exploration and in case of
disagreement, a panel of arbitrators shall resolve the
conflict or disagreement.
 
The permittee shall undertake an exploration work on
the area specified by its permit based on an approved
work program.
 
Any expenditure in excess of the yearly budget of the
approved work program may be carried forward and
credited to the succeeding years covering the duration
of the permit. The Secretary, through the Director, shall
promulgate rules and regulations governing the terms
and conditions of the permit.
 
The permittee may apply for a mineral production
sharing agreement, joint venture agreement, co-
production agreement or financial or technical
assistance agreement over the permit area, which
application shall be granted if the permittee meets the
necessary qualifications and the terms and conditions of
any such agreement: Provided, That the exploration
period covered by the exploration permit shall be
included as part of the exploration period of the mineral
agreement or financial or technical assistance
agreement.
Sec. 24 Declaration of Mining Project Feasibility. A
holder of an exploration permit who determines the
commercial viability of a project covering a mining area
may, within the term of the permit, file with the Bureau
a declaration of mining project feasibility accompanied
by a work program for development. The approval of
the mining project feasibility and compliance with other
requirements provided in this Act shall entitle the
holder to an exclusive right to a mineral production
sharing agreement or other mineral agreements or
financial or technical assistance agreement.
 
Sec. 25 Transfer or Assignment. An exploration permit
may be transferred or assigned to a qualified person
subject to the approval of the Secretary upon the
recommendation of the Director.
 
CHAPTER V
MINERAL AGREEMENTS
 
Sec. 26 Modes of Mineral Agreement. For purposes of
mining operations, a mineral agreement may take the
following forms as herein defined:

(a) Mineral production sharing agreement - is an
agreement where the Government grants to the
contractor the exclusive right to conduct mining
operations within a contract area and shares in the
gross output. The contractor shall provide the financing,
technology, management and personnel necessary for
the implementation of this agreement.
 
(b) Co-production agreement - is an agreement
between the Government and the contractor wherein
the Government shall provide inputs to the mining
operations other than the mineral resource.
 
(c) Joint venture agreement - is an agreement where a
joint-venture company is organized by the Government
and the contractor with both parties having equity
shares. Aside from earnings in equity, the Government
shall be entitled to a share in the gross output.
 
A mineral agreement shall grant to the contractor the
exclusive right to conduct mining operations and to
extract all mineral resources found in the contract area.
In addition, the contractor may be allowed to convert
his agreement into any of the modes of mineral
agreements or financial or technical assistance
agreement covering the remaining period of the original
agreement subject to the approval of the Secretary.
Sec. 27 Eligibility. A qualified person may enter into any
of the three (3) modes of mineral agreement with the
government for the exploration, development and
utilization of mineral resources: Provided, That in case
the applicant has been in the mining industry for any
length of time, he should possess a satisfactory
environmental track record as determined by the Mines
and Geosciences Bureau and in consultation with the
Environment Management Bureau of the Department.
 
Sec. 28 Maximum Areas for Mineral Agreement. The
maximum area that a qualified person may hold at any
time under a mineral agreement shall be:
 
(a) Onshore, in any one province -
 
(1) For individuals, ten (10) blocks; and
 
(2) For partnerships, cooperatives, associations, or
corporations, one hundred (100) blocks.
 
(b) Onshore, in the entire Philippines -
(1) For individuals, twenty (20) blocks; and
 
(2) For partnerships, cooperatives, associations, or
corporations, two hundred (200) blocks.
 
(c) Offshore, in the entire Philippines -
 
(1) For individuals, fifty (50) blocks;
 
(2) For partnerships, cooperatives, associations, or
corporations, five hundred (500) blocks; and
 
(3) For the exclusive economic zone, a larger area to be
determined by the Secretary.
 
The maximum areas mentioned above that a contractor
may hold under a mineral agreement shall not include
mining/quarry areas under operating agreements
between the contractor and a
claimowner/lessee/permittee/licensee entered into
under Presidential Decree No. 463.
 
Sec. 29 Filing and Approval of Mineral Agreements. All
proposed mineral agreements shall be filed in the
region where the areas of interest are located, except in
mineral reservations which shall be filed with the
Bureau.
The filing of a proposal for a mineral agreement shall
give the proponent the prior right to areas covered by
the same. The proposed mineral agreement will be
approved by the Secretary and copies thereof shall be
submitted to the President. Thereafter, the President
shall provide a list to Congress of every approved
mineral agreement within thirty (30) days from its
approval by the Secretary.
 
Sec. 30 Assignment/Transfer. Any assignment or
transfer of rights and obligations under any mineral
agreement except a financial or technical assistance
agreement shall be subject to the prior approval of the
Secretary. Such assignment or transfer shall be deemed
automatically approved if not acted upon by the
Secretary within thirty (30) working days from official
receipt thereof, unless patently unconstitutional or
illegal.
 
Sec. 31 Withdrawal from Mineral Agreements. The
contractor may, by giving due notice at any time during
the terms of the agreement, apply for the cancellation
of the mineral agreement due to causes which, in the
opinion of the contractor, make continued mining
operations no longer feasible or viable. The Secretary
shall consider the notice and issue its decision within a
period of thirty (30) days: Provided, That the contractor
has met all its financial, fiscal and legal obligations.
Sec. 32 Terms. Mineral agreements shall have a term
not exceeding twenty-five (25) years to start from the
date of execution thereof, and renewable for another
term not exceeding twenty-five (25) years under the
same terms and conditions thereof, without prejudice
to charges mutually agreed upon by the parties. After
the renewal period, the operation of the mine may be
undertaken by the Government or through a contractor.
The contract for the operation of a mine shall be
awarded to the highest bidder in a public bidding after
due publication of the notice thereof: Provided, That
the contractor shall have the right to equal the highest
bid upon reimbursement of all reasonable expenses of
the highest bidder.
 
CHAPTER VI
FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENT
 
Sec. 33 Eligibility. Any qualified person with technical
and financial capability to undertake large-scale
exploration, development, and utilization of mineral
resources in the Philippines may enter into a financial or
technical assistance agreement directly with the
Government through the Department.
Sec. 34 Maximum Contract Area. The maximum
contract area that may be granted per qualified person,
subject to relinquishment shall be:
 
(a) 1,000 meridional blocks onshore;
(b) 4,000 meridional blocks offshore; or
(c) Combinations of (a) and (b) provided that it shall not
exceed the maximum limits for onshore and offshore
areas.
 
Sec. 35 Terms and Conditions. The following terms,
conditions, and warranties shall be incorporated in the
financial or technical assistance agreement, to wit:
 
(a) A firm commitment in the form of a sworn
statement, of an amount corresponding to the
expenditure obligation that will be invested in the
contract area: Provided, That such amount shall be
subject to changes as may be provided for in the rules
and regulations of this act;
 
(b) A financial guarantee bond shall be posted in favor
of the Government in an amount equivalent to the
expenditure obligation of the applicant for any year.
(c) Submission of proof of technical competence, such
as, but not limited to, its track record in mineral
resource exploration, development, and utilization;
details of technology to be employed in the proposed
operation; and details of technical personnel to
undertake the operations;
 
(d) Representations and warranties that the applicant
has all the qualifications and none of the
disqualifications for entering into the agreement;
 
(e) Representations and warranties that the contractor
has or has access to all the financing, managerial and
technical expertise and, if circumstances demand, the
technology required to promptly and effectively carry
out the objectives of the agreement with the
understanding to timely deploy these resources under
its supervision pursuant to the periodic work programs
and related budgets, when proper, providing an
exploration period up to two (2) years, extendible for
another two (2) years but subject to annual review by
the Secretary in accordance with the implementing
rules and regulations of this Act, and further, subject to
the relinquishment obligations;
(f) Representations and warranties that, except for
payments for dispositions for its equity, foreign
investments in local enterprises which are qualified for
repartriation, and local supplier's credits and such other
generally accepted and permissible financial schemes
for raising funds for valid business purposes, the
contractor shall not raise any form of financing from
domestic sources of funds, whether in Philippine or
foreign currency, for conducting its mining operations
for and in the contract area;
 
(g) The mining operations shall be conducted in
accordance with the provisions of this Act and its
implementing rules and regulations;
 
(h) Work programs and minimum expenditures
commitments;
 
(i) Preferential use of local goods and services to the
maximum extent practicable;
 
(j) A stipulation that the contractors are obligated to
give preference to Filipinos in all types of mining
employment for which they are qualified and that
technology shall be transferred to the same;
 
(k) Requiring the prominent to effectively use
appropriate anti-pollution technology and facilities to
protect the environment and to restore or rehabilitate
mined out areas and other areas affected by mine
tailings and other forms of pollution or destruction;
 
(l) The contractors shall furnish the Government records
of geologic, accounting, and other relevant data for its
mining operations, and that book of accounts and
records shall be open for inspection by the government;
 
(m) Requiring the proponent to dispose of the minerals
and by products produced under a financial or technical
assistance agreement at the highest price and more
advantageous terms and conditions as provided for
under the rules and regulations of this Act;
 
(n) Provide for consultation and arbitration with respect
to the interpretation and implementation of the terms
and conditions of the agreements; and
 
(o) Such other terms and conditions consistent with the
Constitution and with this Act as the Secretary may
deem to be for the best interest of the State and the
welfare of the Filipino people.
 
Sec. 36 Negotiations. A financial or technical assistance
agreement shall be negotiated by the Department and
executed and approved by the President. The President
shall notify Congress of all Financial or technical
assistance agreements within thirty (30) days from
execution and approval thereof.
 
Sec. 37 Filing and Evaluation of Financial or Technical
Assistance Agreement Proposals. All financial or
technical assistance agreement proposals shall be filed
with the Bureau after payment of the required
processing fees. If the proposal is found to be sufficient
and meritorious in form and substance after evaluation,
it shall be recorded with the appropriate government
agency to give the proponent the prior right to the area
covered by such proposal: Provided, That existing
mineral agreements, financial or technical assistance
agreements and other mining rights are not impaired or
prejudiced thereby. The Secretary shall recommend its
approval to the President.
 
Sec. 38 Terms of Financial or Technical Assistance
Agreement. A financial or technical assistance
agreement shall have a term not exceeding twenty-five
(25) years to start from the execution thereof,
renewable for not more than twenty-five (25) years
under such terms and conditions as may be provided by
law.
 
Sec. 39 Option to Convert into a Mineral Agreement.
The contractor has the option to convert the financial or
technical assistance agreement to a mineral agreement
at any time during the term of the agreement, if the
economic viability of the contract area is found to be
inadequate to justify large-scale mining operations,
after proper notice to the Secretary as provided for
under the implementing rules and regulations:
Provided, That the mineral agreement shall only be for
the remaining period of the original agreement.
 
In the case of a foreign contractor, it shall reduce its
equity to forty percent (40%) in the corporation,
partnership, association, or cooperative. Upon
compliance with this requirement by the contractor, the
Secretary shall approve the conversion and execute the
mineral production-sharing agreement.
 
Sec. 40 Assignment/Transfer. A financial or technical
assistance agreement may be assigned or transferred,
in whole or in part, to a qualified person subject to the
prior approval of the President: Provided, That the
President shall notify Congress of every financial or
technical assistance agreement assigned or converted in
accordance with this provision within thirty (30) days
from the date of the approval thereof.
 
Sec. 41 Withdrawal from Financial or Technical
Assistance Agreement. The contractor shall manifest in
writing to the Secretary his intention to withdraw from
the agreement, if in his judgement the mining project is
no longer economically feasible, even after he has
exerted reasonable diligence to remedy the cause or
the situation. The Secretary may accept the withdrawal:
Provided, That the contractor has complied or satisfied
all his financial, fiscal or legal obligations.
 
CHAPTER VII
SMALL-SCALE MINING
 
Sec. 42 Small-scale Mining. Small-scale mining shall
continue to be governed by Republic Act No. 7076 and
other pertinent laws.
 
CHAPTER VIII
QUARRY RESOURCES
 
Sec. 43 Quarry Permit. Any qualified person may apply
to the provincial/city mining regulatory board for a
quarry permit on privately-owned lands and/or public
lands for building and construction materials such as
marble, basalt, andesite, conglomerate, tuff, adobe,
granite, gabbro, serpentine, inset filing materials, clay
for ceramic tiles and building bricks, pumice, perlite and
other similar materials that are extracted by quarrying
from the ground. The provincial governor shall grant the
permit after the applicant has complied with all the
requirements as prescribed by the rules and
regulations.
 
The maximum area which a qualified person may hold
at any one time shall be five hectares (5 has.): Provided,
That in large-scale quarry operations involving cement
raw materials, marble, granite, sand and gravel and
construction agreements, a qualified person and the
government may enter into a mineral agreement as
defined herein.
 
A quarry permit shall have a term of five (5) years,
renewable for like periods but not to exceed a total
term of twenty-five (25) years, No quarry permit shall
be issued or granted on any area covered by a mineral
agreement, or financial or technical assistance
agreement.
 
Sec. 44 Quarry Fee and Taxes. A permittee shall, during
the term of his permit, pay a quarry fee as provided for
under the implementing rules and regulations. The
permittee shall also pay the excise tax as provided by
pertinent laws.
 
Sec. 45 Cancellation of Quarry Permit. A quarry permit
may be cancelled by the provincial governor for
violations of the provisions of this Act or its
implementing rules and regulations or the terms and
conditions of said permit: Provided, That before the
cancellation of such permit, the holder thereof shall be
given the opportunity to be heard in an investigation
conducted for the purpose.
 
Sec. 46 Commercial Sand and Gravel Permit. Any
qualified person may be granted a permit by the
provincial governor to extract and remove sand and
gravel or other loose or unconsolidated materials which
are used in their natural state, without undergoing
processing from an area of not more than five hectares
(5 has.) and in such quantities as may be specified in the
permit.
 
Sec. 47 Industrial Sand and Gravel Permit. Any qualified
person may be granted an industrial sand and gravel
permit by the Bureau for the extraction of sand and
gravel and other loose or unconsolidated materials that
necessitate the use of mechanical processing covering
an area of more than five hectares (5 has.) at any one
time. The permit shall have a term of five (5) years,
renewable for a like period but not to exceed a total
term of twenty-five (25) years.
 
Sec. 48 Exclusive Sand and Gravel Permit. Any qualified
person may be granted an exclusive sand and gravel
permit by the provincial governor to quarry and utilize
sand and gravel or other loose or unconsolidated
materials from public lands for his own use, provided
that there will be no commercial disposition thereof.
 
A mineral agreement or a financial technical assistance
agreement contractor shall, however, have the right to
extract and remove sand and gravel and other loose
unconsolidated materials without need of a permit
within the area covered by the mining agreement for
the exclusive use in the mining operations: Provided,
That monthly reports of the quantity of materials
extracted therefrom shall be submitted to the mines
regional office concerned: Provided, further, That said
right shall be coterminous with the expiration of the
agreement.
 
Holders of existing mining leases shall likewise have the
same rights as that of a contractor: Provided, That said
right shall be coterminous with the expiry dates of the
lease.
 
Sec. 49 Government Gratuitous Permit. Any
government entity or instrumentality may be granted a
gratuitous permit by the provincial governor to extract
sand and gravel, quarry or loose unconsolidated
materials needed in the construction of building and/or
infrastructure for public use or other purposes over an
area of not more than two hectares (2 has.) for a period
coterminous with said construction.
 
Sec. 50 Private Gratuitous Permit. Any owner of land
may be granted a private gratuitous permit by the
provincial governor.
 
Sec. 51 Guano Permit. Any qualified person may be
granted a guano permit by the provincial governor to
extract and utilize loose unconsolidated guano and
other organic fertilizer materials in any portion of a
municipality where he has established domicile. The
permit shall be for specific caves and/or for confined
sites with locations verified by the Department's field
officer in accordance with existing rules and regulations.
 
Sec. 52 Gemstone Gathering Permit. Any qualified
person may be granted a non-exclusive gemstone
gathering permit by the provincial governor to gather
loose stones useful as gemstones in rivers and other
locations.
CHAPTER IX
TRANSPORT, SALE AND PROCESSING OF MINERALS
 
Sec. 53 Ore Transport Permit. A permit specifying the
origin and quantity of non-processed mineral ores or
minerals shall be required for their transport. Transport
permits shall be issued by the mines regional director
who has jurisdiction over the area where the ores were
extracted. In the case of mineral ores or minerals being
transported from the small-scale mining areas to the
custom mills or processing plants, the Provincial Mining
Regulatory Board (PMRB) concerned shall formulate
their own policies to govern such transport of ores
produced by small-scale miners. The absence of a
permit shall be considered as prima facie evidence of
illegal mining and shall be sufficient cause for the
Government to confiscate the ores or minerals being
transported, the tools and equipment utilized, and the
vehicle containing the same. Ore samples not exceeding
two metric tons (2 m.t.) to be used exclusively for assay
or pilot test purposes shall be exempted from such
requirement.
 
Sec. 54 Mineral Trading Registration. No person shall
engage in the trading of mineral products, either locally
or internationally, unless registered with the
Department of Trade and Industry and accredited by
the Department, with a copy of said registration
submitted to the Bureau.
 
Sec. 55 Minerals Processing Permit. No person shall
engage in the processing of minerals without first
securing a minerals processing permit from the
Secretary. Minerals processing permit shall be for a
period of five (5) years renewable for like periods but
not to exceed a total term of twenty-five (25) years. In
the case of mineral ores or minerals produced by the
small-scale miners, the processing thereof as well as the
licensing of their custom mills, or processing plants shall
continue to be governed by the provisions of Republic
Act No. 7076.
 
Sec. 56 Eligibility of Foreign-owned/-controlled
Corporation. A foreign-owned/-controlled corporation
may be granted a mineral processing permit.
 
CHAPTER X
DEVELOPMENT OF MINING COMMUNITIES, SCIENCE
AND MINING TECHNOLOGY
Sec. 57 Expenditure for Community Development and
Science and Mining Technology. A contractor shall assist
in the development of its mining community, the
promotion of the general welfare of its inhabitants, and
the development of science and mining technology.
 
Sec. 58 Credited Activities. Activities that may be
credited as expenditures for development of mining
communities, and science and mining technology are
the following:
 
(a) Any activity or expenditure intended to enhance the
development of the mining and neighboring
communities of a mining operation other than those
required or provided for under existing laws, or
collective bargaining agreements, and the like: and
 
(b) Any activity or expenditure directed towards the
development of geosciences and mining technology
such as, but not limited to, institutional and manpower
development, and basic and applied researches.
Appropriate supervision and control mechanisms shall
be prescribed in the implementing rules and regulations
of this Act.
 
Sec. 59 Training and Development. A contractor shall
maintain an effective program of manpower training
and development throughout the term of the mineral
agreement and shall encourage and train Filipinos to
participate in all aspects of the mining operations,
including the management thereof. For highly-technical
and specialized mining operations, the contractor may,
subject to the necessary government clearances,
employ qualified foreigners.
Sec. 60 Use of Indigenous Goods, Services and
Technologies. A contractor shall give preference to the
use of local goods, services and scientific and technical
resources in the mining operations, where the same are
of equivalent quality, and are available on equivalent
terms as their imported counterparts.
 
Sec. 61 Donations/Turn Over of Facilities. Prior to
cessation of mining operations occasioned by
abandonment or withdrawal of operations, on public
lands by the contractor, the latter shall have a period of
one (1) year therefrom within which to remove his
improvements; otherwise, all the social infrastructure
and facilities shall be turned over or donated tax-free to
the proper government authorities, national or local, to
ensure that said infrastructure and facilities are
continuously maintained and utilized by the host and
neighboring communities.
Sec. 62 Employment of Filipinos. A contractor shall give
preference to Filipino citizens in all types of mining
employment within the country insofar as such citizens
are qualified to perform the corresponding work with
reasonable efficiency and without hazard to the safety
of the operations. The contractor, however, shall not be
hindered from hiring employees of his own selection,
subject to the provision of Commonwealth Act No. 613,
as amended, for technical and specialized work which in
his judgement and with the approval of the Director,
required highly-specialized training or long experience
in exploration, development or utilization of mineral
resources: Provided, That in no case shall each
employment exceed five (5) years or the payback period
as represented in original project study, whichever is
longer: Provided, further, That each foreigner employed
as mine manager, vice-president for operations or in an
equivalent managerial position in charge of mining,
milling, quarrying or drilling operation shall:
 
(a) Present evidence of his qualification and work
experience; or
 
(b) Shall pass the appropriate government licensure
examination; or
 
(c) In special cases, may be permitted to work by the
Director for a period not exceeding one (1) year:
Provided, however, That if reciprocal privileges are
extended to Filipino nationals in the country of
domicile, the Director may grant waivers or exemptions.
CHAPTER XI
SAFETY AND ENVIRONMENTAL PROTECTION
 
Sec. 63 Mines Safety and Environmental Protection. All
contractors and permittees shall strictly comply with all
the mines safety rules and regulations as may be
promulgated by the Secretary concerning the safe and
sanitary upkeep of the mining operations and achieve
waste-free and efficient mine development. Personnel
of the Department involved in the implementation of
mines safety, health and environmental rules and
regulations shall be covered under Republic Act No.
7305.
 
Sec. 64 Mine Labor. No person under sixteen (16) years
of age shall be employed in any phase of mining
operations and no person under eighteen (18) years of
age shall be employed underground in a mine.
Sec. 65 Mine Supervision. All mining and quarrying
operations that employ more than fifty (50) workers
shall have at least one (1) licensed mining engineer with
at least five (5) years of experience in mining
operations, and one (1) registered foreman.
 
Sec. 66 Mine Inspection. The regional director shall have
exclusive jurisdiction over the safety inspection of all
installations, surface or underground, in mining
operations at reasonable hours of the day or night and
as much as possible in a manner that will not impede or
obstruct work in progress of a contractor or permittee.
 
Sec. 67 Power to Issue Orders. The mines regional
director shall, in consultation with the Environmental
Management Bureau, forthwith or within such time as
specified in his order, require the contractor to remedy
any practice connected with mining or quarrying
operations, which is not in accordance with safety and
anti-pollution laws and regulations, which is not in
accordance with safety and anti-pollution laws and
regulations. In case of imminent danger to life or
property, the mines regional director may summarily
suspend the mining or quarrying operations until the
danger is removed, or appropriate measures are taken
by the contractor or permittee.
 
Sec. 68 Report of Accidents. In case of any incident or
accident, causing or creating the danger of loss of life or
serious physical injuries, the person in charge of
operations shall immediately report the same to the
regional office where the operations are situated.
Failure to report the same without justifiable reason
shall be a cause for the imposition of administrative
sanctions prescribed in the rules and regulations
implementing this Act.
Sec. 69 Environmental Protection. Every contractor shall
undertake an environmental protection and
enhancement program covering the period of the
mineral agreement or permit. Such environmental
program shall be incorporated in the work program
which the contractor or permittee shall submit as an
accompanying document to the application for a
mineral agreement or permit. The work program shall
include not only plans relative to mining operations but
also to rehabilitation, regeneration, revegetation and
reforestation of mineralized areas, slope stabilization of
mined-out and tailings covered areas, aquaculture,
watershed development and water conservation; and
socioeconomic development.
 
Sec. 70 Environmental Impact Assessment (EIA). Except
during the exploration period of a mineral agreement or
financial or technical assistance agreement or an
exploration permit, an environmental clearance
certificate shall be required based on an environmental
impact assessment and procedures under the Philippine
Environmental Impact Assessment System including
Sections 26 and 27 of the Local Government Code of
1991 which require national government agencies to
maintain ecological balance, and prior consultation with
the local government units, nongovernmental and
people's organizations and other concerned sectors of
the community: Provided, That a completed ecological
profile of the proposed mining area shall also constitute
part of the environmental impact assessment. People's
organizations and non-governmental organizations shall
be allowed and encourage to participate in ensuring
that contractors/permittees shall observe all the
requirements of environmental protection.
Sec. 71 Rehabilitation. Contractors and permittees shall
technically and biologically rehabilitate the excavated
mined-out, tailings covered and disturbed areas to the
condition of environmental safety, as may be provided
in the implementing rules and regulations of this Act. A
mine rehabilitation fund shall be created, based on the
contractor's approved work program, and shall be
deposited as a trust fund in a government depository
bank and used for physical and social rehabilitation of
areas and communities affected by mining activities and
for research on the social, technical and preventive
aspects of rehabilitation. Failure to fulfill the above
obligation shall mean immediate suspension or closure
of the mining activities of the contractor/permittee
concerned.
CHAPTER XII
AUXILIARY MINING RIGHTS
 
Sec. 72 Timber Rights. Any provision of law to the
contrary notwithstanding, a contractor may be ranged a
right to cut trees or timber within his mining area as
may be necessary for his mining operations subject to
forestry laws, rules and regulations: Provided, That if
the land covered by the mining area is already covered
by existing timber concessions, the volume of timber
needed and the manner of cutting and removal thereof
shall be determined by the mines regional director,
upon consultation with the contractor, the timber
concessionaire/permittee and the Forest Management
Bureau of the Department: Provided, further, That in
case of disagreement between the contractor and the
timber concessionaire, the matter shall be submitted to
the Secretary whose decision shall be final. The
contractor shall perform reforestation work within his
mining area in accordance with forestry laws, rules and
regulations.
 
Sec. 73 Water Rights. A contractor shall have water
rights for mining operations upon approval of
application with the appropriate government agency in
accordance with existing water laws, rules and
regulations promulgated thereunder: Provided, That
water rights already granted or vested through long
use, recognized and acknowledged by local customs,
laws, and decisions of courts shall not thereby be
impaired: Provided further, That the Government
reserves the right to regulate water rights and the
reasonable and equitable distribution of water supply
so as to prevent the monopoly of the use thereof.
Sec. 74 Right to Possess Explosives. A contractor/
exploration permittee shall have the right to possess
and use explosives within his contract/permit area as
may be necessary for his mining operations upon
approval of an application with the appropriate
government agency in accordance with existing laws,
rules and regulations promulgated thereunder:
Provided, That the Government reserves the right to
regulate and control the explosive accessories to ensure
safe mining operations.
 
Sec. 75 Easement Rights. When mining areas are so
situated that for purposes of more convenient mining
operations it is necessary to build, construct or install
on the mining areas or lands owned, occupied or leased
by other persons, such infrastructure as roads,
railroads, mills, waste dump sites, tailings ponds,
warehouses, staging or storage areas and port facilities,
tramways, runways, airports, electric transmission,
telephone or telegraph lines, dams and their normal
flood and catchment areas, sites for water wells,
ditches, canals, new river beds, pipelines, flumes, cuts,
shafts, tunnels, or mills, the contractor, upon payment
of just compensation, shall be entitled to enter and
occupy said mining areas or lands.
 
Sec. 76 Entry into Private Lands and Concession Areas.
Subject to prior notification, holders of mining rights
shall not be prevented from entry into private lands and
concession areas by surface owners, occupants, or
concessionaires when conducting mining operations
therein: Provided, That any damage done to the
property of the surface owner, occupant, or
concessionaire as a consequence of such operations
shall be properly compensated as may be provided for
in the implementing rules and regulations: Provided,
further, That to guarantee such compensation, the
person authorized to conduct mining operation shall,
prior thereto, post a bond with the regional director
based on the type of properties, the prevailing prices in
and around the area where the mining operations are
to be conducted, with surety or sureties satisfactory to
the regional director.
 
CHAPTER XIII
SETTLEMENT OF CONFLICTS
 
Sec. 77 Panel of Arbitrators. There shall be a panel of
arbitraters in the regional office of the Department
composed of three (3) members, two (2) of whom must
be members of the Philippine Bar in good standing and
one licensed mining engineer or a professional in a
related field, and duly designated by the Secretary as
recommended by the Mines and Geosciences Bureau
Director. Those designated as members of the panel
shall serve as such in addition to their work in the
Department without receiving any additional
compensation. As much as practicable, said members
shall come from the different bureaus of the
Department in the region. The presiding officer shall be
on a yearly basis. The members of the panel shall
perform their duties and obligations in hearing and
deciding cases until their designation is withdrawn or
revoked by the Secretary. Within thirty (30) working
days, after the submission of the case by the parties for
decision, the panel shall have exclusive and original
jurisdiction to hear and decide on the following:
 
(a) Disputes involving rights to mining areas;
 
(b) Disputes involving mineral agreements or permits;
 
(c) Disputes involving surface owners, occupants and
claimholders/concessionaires; and
 
(d) Disputes pending before the Bureau and the
Department at the date of the effectivity of this Act.
 
Sec. 78 Appellate Jurisdiction. The decision or order of
the panel of arbitrators may be appealed by the party
not satisfied thereto to the mines Adjudication Board
within fifteen (15) days from receipt thereof which must
decide the case within thirty (30) days from submission
thereof for decision.
 
Sec. 79 Mines Adjudication Board. The Mines
Adjudication Board shall be composed of three (3)
members. The Secretary shall be the chairman with the
Director of the Mines and Geosciences Bureau and the
Undersecretary for Operations of the Department as
member thereof. The Board shall have the following
powers and functions:
 
(a) To promulgate rules and regulations governing the
hearing and disposition of cases before it, as well as
those pertaining to its internal functions, and such rules
and regulations as may be necessary to carry out its
functions;
 
(b) To administer oaths, summon the parties to a
controversy, issue subpoenas requiring the attendance
and testimony of witnesses or the production of such
books, paper, contracts, records, statement of accounts,
agreements, and other documents as may be material
to a just determination of the matter under
investigation, and to testify in any investigation or
hearing conducted in pursuance of this Act;
 
(c) To conduct hearings on all matters within its
jurisdiction, proceed to hear and determine the
disputes in the absence of any party thereto who has
been summoned or served with notice to appear,
conduct its proceedings or any part thereof in public or
in private, adjourn its hearings at any time and place,
refer technical matters or accounts to an expert and to
accept his report as evidence after hearing of the
parties upon due notice, direct parties to be joined in or
excluded from the proceedings, correct, amend, or
waive any error, defect or irregularity, whether in
substance or in form, give all such directions at it may
deem necessary or expedient in the determination of
the dispute before it and dismiss the mining dispute as
part thereof, where it is trivial or where further
proceedings by the Board are not necessary or
desirable;
 
(1) to hold any person in contempt, directly or
indirectly, and impose appropriate penalties therefor;
and
 
(2) To enjoin any or all acts involving or arising from any
case pending before it which, if not restrained
forthwith, may cause grave or irreparable damage to
any of the parties to the case or seriously affect social
and economic stability.
 
In any proceeding before the Board, the rules of
evidence prevailing in courts of law or equity shall not
be controlling and it is the spirit and intention of this
Act that shall govern. The Board shall use every and all
reasonable means to ascertain the facts in each case
speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of
due process. In any proceeding before the Board, the
parties may be represented by legal counsel. the
findings of fact of the Board shall be conclusive and
binding on the parties and its decision or order shall be
final and executory.
 
A petition for review by certiorari and question of law
may be filed by the aggrieved party with the Supreme
Court within thirty (30) days from receipt of the order
or decision of the Board.
 
CHAPTER XIV
GOVERNMENT SHARE
 
Sec. 80 Government Share in Mineral Production
Sharing Agreement. The total government share in a
mineral production sharing agreement shall be the
excise tax on mineral products as provided in Republic
Act No. 7729, amending Section 151(a) of the National
Internal Revenue Code, as amended.
 
Sec. 81 Government Share in Other Mineral
Agreements. The share of the Government in co-
production and joint-venture agreements shall be
negotiated by the Government and the contractor
taking into consideration the: (a) capital investment of
the project, (b) risks involved, (c) contribution of the
project to the economy, and (d) other factors that will
provide for a fair and equitable sharing between the
Government and the contractor. The Government shall
also be entitled to compensations for its other
contributions which shall be agreed upon by the parties,
and shall consist, among other things, the contractor's
income tax, excise tax, special allowance, withholding
tax due from the contractor's foreign stockholders
arising from dividend or interest payments to the said
foreign stockholders, in case of a foreign national, and
all such other taxes, duties and fees as provided for
under existing laws.
 
The Government share in financial or technical
assistance agreement shall consist of, among other
things, the contractor's corporate income tax, excise
tax, special allowance, withholding tax due from the
contractor's foreign stockholders arising from dividend
or interest payments to the said foreign stockholder in
case of a foreign national and all such other taxes,
duties and fees as provided for under existing laws.
 
The collection of government share in financial or
technical assistance agreement shall commence after
the financial or technical assistance agreement
contractor has fully recovered its pre-operating
expenses, exploration, and development expenditures,
inclusive.
 
Sec. 82 Allocation of Government Share. The
Government share as referred to in the preceding
sections shall be shared and allocated in accordance
with Sections 290 and 292 of Republic Act No. 7160
otherwise known as the Local Government Code of
1991. In case the development and utilization of
mineral resources is undertaken by a government-
owned or controlled corporation, the sharing and
allocation shall be in accordance with Sections 291 and
292 of the said Code.
 
CHAPTER XV
TAXES AND FEES
 
Sec. 83 Income Taxes. After the lapse of the income tax
holiday as provided for in the Omnibus Investments
Code, the contractor shall be liable to pay income tax as
provided in the National Internal Revenue Code, as
amended.
 
Sec. 84 Excise Tax on Mineral Products. The contractor
shall be liable to pay the excise tax on mineral products
as provided for under Section 151 of the National
Internal Revenue Code: Provided, however, That with
respect to a mineral production sharing agreement, the
excise tax on mineral products shall be the government
share under said agreement.
 
Sec. 85 Mine Wastes and Tailings Fees. A semi-annual
fee to be known as mine wastes and tailings fee is
hereby imposed on all operating mining companies in
accordance with the implementing rules and
regulations. The mine wastes and tailings fee shall
accrue to a reserve fund to be used exclusively for
payment for damages to:
 
(a) Lives and personal safety;
(b) Lands, agricultural crops and forest products, marine
life and aquatic resources, cultural resources; and
(c) Infrastructure and the revegetation and
rehabilitation of silted farm lands and other areas
devoted to agriculture and fishing caused by mining
pollution.
 
This is in addition to the suspension or closure of the
activities of the contractor at any time and the penal
sanctions imposed upon the same.
 
The Secretary is authorized to increase mine wastes and
tailings fees, when public interest so requires, upon the
recommendation of the Director.
 
Sec. 86 Occupation Fees. There shall be collected from
any holder of a mineral agreement, financial or
technical assistance agreement or exploration permit
on public or private lands, an annual occupation fee in
accordance with the following schedule;
 
(a) For exploration permit - Five pesos (P5.00) per
hectare or fraction thereof per annum;
 
(b) For mineral agreements and financial or technical
assistance agreements - Fifty pesos (P50.00) per hectare
or fraction thereof per annum; and
 
(c) For mineral reservation - One hundred pesos
(P100.00) per hectare or fraction thereof per annum.
 
The Secretary is authorized to increase the occupation
fees provided herein when the public interest so
requires, upon recommendation of the Bureau Director.
 
Sec. 87 Manner of payment of Fees. The fees shall be
paid on the date the mining agreement is registered
with the appropriate office and on the same date every
year thereafter. It shall be paid to the treasurer of the
municipality or city where the onshore mining areas are
located, or to the Director in case of offshore mining
areas. For this purpose, the appropriate officer shall
submit to the treasurer of the municipality or city where
the onshore mining area is located, a complete list of all
onshore mining rights registered with his office,
indicating therein the names of the holders, area in
hectares, location, and date registered. If the fee is not
paid on the date specified, it shall be increased by
twenty-five per centum (25%).
 
Sec. 88 Allocation of Occupation Fees. Thirty per
centum (30%) of all occupational fees collected from
holders of mining rights in onshore mining areas shall
accrue to the province and seventy per centum (70%) to
the municipality in which the onshore mining areas are
located. In a chartered city, the full amount shall accrue
to the city concerned.
 
Sec. 89 Filing Fees and Other Charges. The Secretary is
authorized to charge reasonable filing fees and other
charges as he may prescribe in accordance with the
implementing rules and regulations.
 
CHAPTER XVI
INCENTIVES
 
Sec. 90 Incentives. The contractors in mineral
agreements, and financial or technical assistance
agreements shall be entitled to the applicable fiscal and
non-fiscal incentives as provided for under Executive
Order No. 226, otherwise known as the Omnibus
Investments Code of 1987: Provided, That holders of
exploration permits may register with the Board of
Investments and be entitled to the fiscal incentives
granted under the said Code for the duration of the
permits or extensions thereof: Provided, further, That
mining activities shall always be included in the
investment priorities plan.
Sec. 91 Incentives for Pollution Control Devices.
Pollution control devices acquired, constructed or
installed by contractors shall not be considered as
improvements on the land or building where they are
placed, and shall not be subject to real property and
other taxes or assessments: Provided, however, That
payment of mine wastes and tailings fees is not
exempted.
 
Sec. 92 Income Tax-Carry Forward of Losses. A net
operating loss without the benefit of incentives incurred
in any of the first ten (10) years of operations may be
carried over as a deduction from taxable income for the
next five (5) years immediately following the year of
such loss. The entire amount of the loss shall be carried
over to the first of the five (5) taxable years following
the loss, and any portion of such loss which exceeds the
taxable income of such first year shall be deducted in
like manner from the taxable income of the next
remaining four (4) years.
Sec. 93 Income Tax-Accelerated Depreciation. Fixed
assets may be depreciated as follows:
 
(a) To the extent of not more than twice as fast as the
normal rate of depreciation or depreciated at normal
rate of depreciation if the expected life is ten (10) years
or less; or
 
(b) Depreciated over any number of years between five
(5) years and the expected life if the latter is more than
ten (10) years, and the depreciation thereon allowed as
deduction from taxable income: Provided, That the
contractor notifies the Bureau of Internal Revenue at
the beginning of the depreciation period which
depreciation rate allowed by this section will be used.
 
In computing for taxable income, unless otherwise
provided in this Act, the contractor may, at his option,
deduct exploration and development expenditures
accumulated at cost as of the date of the prospecting or
exploration and development expenditures paid or
incurred during the taxable year: Provided, That the
total amount deductible for exploration and
development expenditures shall not exceed twenty-five
per centum (25%) of the net income from mining
operations. The actual exploration and development
expenditures minus the twenty-five per centum (25%)
net income from mining shall be carried forward to the
succeeding years until fully deducted.
Net income from mining operation is defined as gross
income from operations less allowable deductions
which are necessary or related to mining operations.
Allowable deductions shall include mining, milling and
marketing expenses, depreciation or properties directly
used in the mining operations. This paragraph shall not
apply to expenditures for the acquisition or
improvement of property of a character which is subject
to the allowances for depreciation.
 
Sec. 94 Investment Guarantees. The contractor shall be
entitled to the basic rights and guarantees provided in
the Constitution and such other rights recognized by the
government as enumerated hereunder.
 
(a) Repatriation of investments. The right to repatriate
the entire proceeds of the liquidation of the foreign
investment in the currency in which the investment was
originally made and at the exchange rate prevailing at
the time of repatriation.
(b) Remittance of earnings. The right to remit earnings
from the investment in the currency in which the
foreign investment was originally made at the exchange
rate prevailing at the time of remittance.
 
(c) Foreign loans and contracts. The right to remit at the
exchange rate prevailing at the time of remittance such
sums as may be necessary to meet the payments of
interest and principal on foreign loans and foreign
obligations arising from financial or technical assistance
contracts.
 
(d) Freedom from expropriation. The right to be free
from expropriation by the government of the property
represented by investments or loans, or of the property
of the enterprise except for public use or in the interest
of national welfare or defense and upon payment of
just compensation. In such cases, foreign investors or
enterprises shall have the right to remit sums received
as compensation for the expropriated property in the
currency in which the investment was originally made
and at the exchange rate prevailing at the time of
remittance.
 
(e) Requisition of investment. The right to be free from
requisition of the property represented by the
investment or of the property of the enterprises except
in case of war or national emergency and only for the
duration thereof. Just compensation shall be
determined and paid either at the time or immediately
after cessation of the state of war or national
emergency. Payments received as compensation for the
requisitioned property may be remitted in the currency
in which the investments were originally made and at
the exchange rate prevailing at the time of remittance.
 
(f) Confidentiality. Any confidential information supplied
by the contractor pursuant to this Act and its
implementing rules and regulations shall be treated as
such by the department and the Government, and
during the term of the project to which it relates.
 
CHAPTER XVII
GROUND FOR CANCELLATION, REVOCATION, AND
TERMINATION
 
Sec. 95 Late or Non-filing of Requirements. Failure of
the permittee or contractor to comply with any of the
requirements provided in this Act or in its implementing
rules and regulations, without a valid reason, shall be
sufficient ground from the suspension of any permit or
agreement provided under this Act.
 
Sec. 96 Violation of the Terms and Conditions of Permits
or Agreements. Violations of the terms and conditions
of the permits or agreements shall be a sufficient
ground for cancellation of the same.
 
Sec. 97 Non-payment of taxes and Fees. Failure to pay
the taxes and fees due the Government for two (2)
consecutive years shall cause the cancellation of the
exploration permit, mineral agreement, financial or
technical assistance agreement and other agreements
and the re-opening of the area subject thereof to new
applicants.
 
Sec. 98 Suspension or Cancellation of Tax Incentives and
Credits. Failure to abide by the terms and conditions of
tax incentives and credits shall cause the suspension or
cancellation of said incentives and credits.
 
Sec. 99 Falsehood or Omission of Facts in the
Statement. All statements made in the exploration
permit, mining agreement and financial or technical
assistance shall be considered as conditions and
essential parts thereof and any falsehood in said
statements or omission of facts therein which may alter,
change or affect substantially the facts set forth in said
statements may cause the revocation and termination
of the exploration permit, mining agreement and
financial or technical assistance agreement.
 
CHAPTER XVIII
ORGANIZATIONAL AND INSTITUTIONAL
ARRANGEMENT
 
Sec. 100 From Staff Bureau to Line Bureau. The Mines
and Geosciences Bureau is hereby transformed into a
line bureau consistent with Section 9 of this Act:
Provided, That under the Mines and Geosciences
Bureau shall be the necessary mines regional, district
and other pertinent offices - the number and specific
functions of which shall be provided in the
implementing rules and regulations of this Act.
 
CHAPTER XIX
PENAL PROVISIONS
 
Sec. 101 False Statements. Any person who knowingly
presents any false application, declaration, or evidence
to the Government or publishes or causes to be
published any prospectus or other information
containing any false statement relating to mines, mining
operations or mineral agreements, financial or technical
assistance agreements and permits shall, upon
conviction, be penalized by a fine of not exceeding Ten
Thousand Pesos (P10,000.00).
 
Sec. 102 Illegal Exploration. Any person undertaking
exploration work without the necessary exploration
permit shall, upon conviction, be penalized by a fine of
not exceeding Fifty thousand pesos (P50,000.00).
 
Sec. 103 Theft of Minerals. Any person extracting
minerals and disposing the same without a mining
agreement, lease, permit, license, or steals minerals or
ores or the products thereof from mines or mills or
processing plants shall, upon conviction, be imprisoned
from six (6) months to six (6) years or pay a fine from
Ten thousand pesos (P10,000.00) to Twenty thousand
pesos (P20,000.00), or both, at the discretion of the
appropriate court. In addition, he shall be liable to pay
damages and compensation for the minerals removed,
extracted, and disposed of. In the case of associations,
partnerships, or corporations, the president and each of
the directors thereof shall be responsible for the acts
committed by such association, corporation, or
partnership.
 
Sec. 104 Destruction of Mining Structures. Any person
who willfully destroys or damages structures in or on
the mining area or on the mill sites shall, upon
conviction, be imprisoned for a period not to exceed
five (5) years and shall, in addition, pay compensation
for the damages which may have been caused thereby.
 
Sec. 105 Mines Arson. Any person who willfully sets fire
to any mineral stockpile, mine or workings, fittings or a
mine, shall be guilty of arson and shall be punished,
upon conviction, by the appropriate court in accordance
with the provisions of the Revised Penal Code and shall,
in addition, pay compensation for the damages caused
thereby.
Sec. 106 Willful Damage to a Mine. Any person who
willfully damages a mine, unlawfully causes water to
run into a mine, or obstructs any shaft or passage to a
mine, or renders useless, damages or destroys any
machine, appliance, apparatus; rope, chain, tackle, or
any other things used in a mine, shall be punished, upon
conviction, by the appropriate court, by imprisonment
not exceeding a period of five (5) years and shall, in
addition, pay compensation for the damages caused
thereby.
 
Sec. 107 Illegal Obstruction to Permittees or
Contractors. Any person who, without justifiable cause,
prevents or obstructs the holder of any permit,
agreement or lease from undertaking his mining
operations shall be punished, upon conviction by the
appropriate court, by a fine not exceeding Five
thousand pesos (P5,000.00) or imprisonment not
exceeding one (1) year, or both, at the discretion of the
court.
 
Sec. 108 Violation of the Terms and Conditions of the
Environmental Compliance Certificate. Any person who
willfully violates or grossly neglects to abide by the
terms and conditions of the environmental compliance
certificate issued to said person and which causes
environmental damage through pollution shall suffer
the penalty of imprisonment of six (6) months to six (6)
years or a fine of Fifty thousand pesos (P50,000.00) to
Two Hundered Thousand Pesos (P200,000.00), or both
at the discretion of the court.
 
Sec. 109 Illegal Obstruction to Government Officials.
Any person who illegally prevents or obstructs the
Secretary, the Director or any of their representatives in
the performance of their duties under the provisions of
this Act and of the regulations promulgated hereunder
shall be punished, upon conviction, by the appropriate
court, by a fine not exceeding Five thousand pesos
(P5,000.00) or by imprisonment not exceeding one (1)
year, or both, at the discretion of the court.
 
Sec. 110 Other Violations. Any other violation of this Act
and its implementing rules and regulations shall
constitute an offense punishable with a fine not
exceeding five thousand pesos (P5,000.00).
 
Sec. 111 Fines. The Secretary is authorized to charge
fines for late or nonsubmission of reports in accordance
with the implementing rules and regulations of this Act
REPUBLIC ACT NO. 7076: People's Small-scale Mining
Act
Sec. 2. Declaration of Policy. — It is hereby declared of
the State to promote, develop, protect and rationalize
viable small-scale mining activities in order to generate
more employment opportunities and provide an
equitable sharing of the nation's wealth and natural
resources, giving due regard to existing rights as herein
provided.
Sec.  3. Definitions. — For purposes of this Act, the
following terms shall be defined as follows:
(a) "Mineralized areas" refer to areas with naturally
occurring mineral deposits of gold, silver, chromite,
kaolin, silica, marble, gravel, clay and like mineral
resources; 
(b) "Small-scale mining" refers to mining activities which
rely heavily on manual labor using simple implement
and methods and do not use explosives or heavy mining
equipment;
(c) "Small-scale miners" refer to Filipino citizens who,
individually or in the company of other Filipino citizens,
voluntarily form a cooperative duly licensed by the
Department of Environment and Natural Resources to
engage, under the terms and conditions of a contract, in
the extraction or removal of minerals or ore-bearing
materials from the ground;
(d) "Small-scale mining contract" refers to co-
production, joint venture or mineral production sharing
agreement between the State and a small-scale mining
contractor for the small-scale utilization of a plot of
mineral land; 
(e) "Small-scale mining contractor" refers to an
individual or a cooperative of small-scale miners,
registered with the Securities and Exchange
Commission or other appropriate government agency,
which has entered into an agreement with the State for
the small-scale utilization of a plot of mineral land
within a people's small-scale mining area;
(f) "Active mining area" refers to areas under actual
exploration, development, exploitation or commercial
production as determined by the Secretary after the
necessary field investigation or verification including
contiguous and geologically related areas belonging to
the same claimowner and/or under contract with an
operator, but in no case to exceed the maximum area
allowed by law;
(g) "Existing mining right" refers to perfected and
subsisting claim, lease, license or permit covering a
mineralized area prior to its declaration as a people's
small-scale mining area;
(h) "Claimowner" refers to a holder of an existing
mining right;
(i) "Processor" refers to a person issued a license to
engage in the treatment of minerals or ore-bearing
materials such as by gravity concentration, leaching
benefication, cyanidation, cutting, sizing, polishing and
other similar activities;
(j) "License" refers to the privilege granted to a person
to legitimately pursue his occupation as a small-scale
miner or processor under this Act;
(k) "Mining plan" refers to a two-year program of
activities and methodologies employed in the extraction
and production of minerals or ore-bearing materials,
including the financial plan and other resources in
support thereof;
(l) "Director" refers to the regional executive director of
the Department of Environment and Natural Resources;
and
(m) "Secretary" refers to the Secretary of the
Department of Environment and Natural Resources.
Sec.  4. People's Small-scale Mining Program. — For the
purpose of carrying out the declared policy provided in
Section 2 hereof, there is hereby established a People's
Small-scale Mining Program to be implemented by the
Secretary of the Department of Environment and
Natural Resources, hereinafter called the Department,
in coordination with other concerned government
agencies, designed to achieve an orderly, systematic
and rational scheme for the small-scale development
and utilization of mineral resources in certain mineral
areas in order to address the social, economic,
technical, and environmental connected with small-
scale mining activities.
The People's Small-scale Mining Program shall include
the following features:
(a) The identification, segregation and reservation of
certain mineral lands as people's small-scale mining
areas;
(b) The recognition of prior existing rights and
productivity;
(c) The encouragement of the formation of
cooperatives;
(d) The extension of technical and financial assistance,
and other social services;
(e) The extension of assistance in processing and
marketing;
(f) The generation of ancillary livelihood activities;
(g) The regulation of the small-scale mining industry
with the view to encourage growth and productivity;
and
(h) The efficient collection of government revenue.
Sec.  5. Declaration of People's Small-scale Mining
Areas. — The Board is hereby authorized to declare and
set aside people's small-scale mining areas in sites
onshore suitable for small-scale mining, subject to
review by the Secretary, immediately giving priority to
areas already occupied and actively mined by small-
scale miners before August 1, 1987: Provided, That such
areas are not considered as active mining areas:
Provided, further, That the minerals found therein are
technically and commercially suitable for small-scale
mining activities: Provided, finally, That the areas are
not covered by existing forest rights or reservations and
have not been declared as tourist or marine reserved,
parks and wildlife reservations, unless their status as
such is withdrawn by competent authority. 
Sec.  6. Future People's Small-scale Mining Areas. — The
following lands, when suitable for small-scale mining,
may be declared by the Board as people's small scale
mining areas:
(a) Public lands not subject to any existing right; vi 
(b) Public lands covered by existing mining rights which
are not active mining areas; and 
(c) Private lands, subject to certain rights and
conditions, except those with substantial improvements
or in bona fide and regular use as a yard, stockyard,
garden, plant nursery, plantation, cemetery or burial
site, or land situated within one hundred meters (100
m.) from such cemetery or burial site, water reservoir or
a separate parcel of land with an area of ten thousand
square meters (10,000 sq. m.) or less.
Sec.  7. Ancestral Lands. — No ancestral land may be
declared as a people's small-scale mining area without
the prior consent of the cultural communities
concerned: Provided, That, if ancestral lands are
declared as people's small-scale mining areas, the
members of the cultural communities therein shall be
given priority in the awarding of small-scale mining
contracts.  Sec.  12. Rights Under a People's Small-scale Mining
Sec.  8. Registration of Small-scale Miners. — All
persons undertaking small-scale mining activities shall
register as miners with the Board and may organize
themselves into cooperatives in order to qualify for the
awarding of a people's small-scale mining contract.
Sec.  9. Award of People's Small-scale Mining Contracts.
— A people's small-scale mining contract may be
awarded by the Board to small-scale miners who have
voluntarily organized and have duly registered with the
appropriate government agency as an individual miner
or cooperative; Provided, That only one (1) people's
small-scale mining contract may be awarded at any one
time to a small-scale mining operations within one (1)
year from the date of award: Provided, further, That
priority shall be given or city where the small-scale
mining area is located.
Applications for a contract shall be subject to a
reasonable fee to be paid to the Department of
Environment and Natural Resources regional office
having jurisdiction over the area.
Sec.  10. Extent of Contract Area. — The Board shall
determine the reasonable size and shape of the
contract area following the meridional block system
established under Presidential Decree No. 463, as
amended, otherwise known as the Mineral Resources
Development Decree of 1974, but in no case shall the
area exceed twenty hectares (20 has.) per contractor
and the depth or length of the tunnel or adit not
exceeding that recommended by the director taking
into account the following circumstances:
(a) Size of membership and capitalization of the
cooperative;
(b) Size of mineralized area;
(c) Quantity of mineral deposits;
(d) Safety of miners;
(e) Environmental impact and other considerations; and
(f) Other related circumstances.
Sec.  11. Easement Rights. — Upon the declaration of a
people's small-scale mining area, the director, in
consultation with the operator, claimowner, landowner
or lessor of an affected area, shall determine the right
of the small scale miners to existing facilities such as
mining and logging roads, private roads, port and
communication facilities, processing plants which are
necessary for the effective implementation of the
People's Small-scale Mining Program, subject to
payment of reasonable fees to the operator,
claimowner, landowner or lessor.
Contract. — A people's small-scale mining contract
entitles the small-scale mining contractor to the right to
mine, extract and dispose of mineral ores for
commercial purposes. In no case shall a small-scale
mining contract be subcontracted, assigned or
otherwise transferred.
Sec.  13. Terms and Conditions of the Contract. — A
contract shall have a term of two (2) years, renewable
subject to verification by the Board for like periods as
long as the contractor complies with the provisions set
forth in this Act, and confers upon the contractor the
right to mine within the contract area: Provided, That
the holder of a small-scale mining contract shall have
the following duties and obligations:
(a) Undertake mining activities only in accordance with
a mining plan duly approved by the Board;
(b) Abide by the Mines and Geosciences Bureau and the
small-scale Mining Safety Rules and Regulations;
(c) Comply with his obligations to the holder of an
existing mining right;
(d) Pay all taxes, royalties or government production
share as are now or may hereafter be provided by law; 
(e) Comply with pertinent rules and regulations on
environmental protection and conservation, particularly
those on tree-cutting mineral-processing and pollution
control;
(f) File under oath at the end of each month a detailed
production and financial report to the Board; and
(g) Assume responsibility for the safety of persons
working in the mines.
Sec.  14. Rights of Claimowners. — In case a site
declared and set aside as a people's-scale mining area is
covered by an existing mining right, the claimowner and
the small-scale miners therein are encouraged to enter
into a voluntary and acceptable contractual agreement
with respect to the small-scale utilization of the mineral
values from the area under claim. In case of
disagreement, the claimowner shall be entitled to the
following rights and privileges:
(a) Exemption from the performance of annual work
obligations and payment of occupation fees, rental, and
real property taxes;
(b) Subject to the approval of the Board, free access to
the contract area to conduct metallurgical tests,
explorations and other activities, provided such
activities do not unduly interfere with the operations of
the small-scale miners; and
(c) Royalty equivalent to one and one half percent (1
1/2%) of the gross value of the metallic mineral output
or one percent (1%) of the gross value of the
nonmetallic mineral output to be paid to the
claimowner: Provided, That such rights and privileges
shall be available only if he is not delinquent and other
performance of his annual work obligations and other
requirements for the last two (2) years prior to the
effectivity of this Act.
Sec.  15. Rights of Private Landowners. — The private
landowner or lawful possessor shall be notified of any
plan or petition to declare his land as a people's small-
scale mining area. Said landowner may oppose such
plan or petition in an appropriate proceeding and
hearing conducted before the Board.
If a private land is declared as a people's small-scale
mining area, the owner and the small-scale mining
contractors are encouraged to enter into a voluntary
and acceptable contractual agreement for the small-
scale utilization of the mineral values from the private
land: Provided, That the owner shall in all cases be
entitled to the payment of actual damages which he
may suffer as a result of such declaration: Provided,
further, That royalties paid to the owner shall in no case
exceed one percent (1%) of the gross value of the
minerals recovered as royalty.
Sec.  16. Ownership of Mill Tailings. — The small-scale
mining contractor shall be the owner of all mill tailings
produced from the contract area. He may sell the
tailings or have them processed in any custom mill in
the area: Provided, That, if the small-scale mining
contractor decide to sell its mill tailings, the claimowner
shall have a preemptive right to purchase said mill
tailings at the prevailing market price.
Sec.  17. Sale of Gold. — All gold produced by small-
scale miners in any mineral area shall be sold to the
Central Bank, or its duly authorized representatives,
which shall buy it at prices competitive with those
prevailing in the world market regardless of volume or
weight.
The Central Bank shall establish as many buying stations
in gold-rush areas to fully service the requirements of
the small-scale minerals thereat.
Sec.  18. Custom Mills. — The establishment and
operation of safe and efficient customs mills to process
minerals or ore-bearing materials shall be limited to
mineral processing zones duly designated by the local
government unit concerned upon recommendation of
the Board.
In mining areas where the private sector is unable to
establish custom mills, the Government shall construct
such custom mills upon the recommendation of the
Board based on the viability of the project.
The Board shall issue licenses for the operation of
custom mills and other processing plants subject to
pollution control and safety standards.
The Department shall establish assay laboratories to
cross-check the integrity of custom mills and to render
metallurgical and laboratory services to mines.
Custom mills shall be constituted as withholding agents
for the royalties, production share or other taxes due
the Government.
Sec.  19. Government Share and Allotment. — The
revenue to be derived by the Government from the
operation of the mining program herein established
shall be subject to the sharing provided in the Local
Government Code.
Sec.  20. People's Small-scale Mining Protection Fund.
— There is hereby created a People's Small-scale Mining
Protection Fund which shall be fifteen percent (15%) of
the national government's share due the Government
which shall be used primarily for information
dissemination and training of small-scale miners on
safety, health and environmental protection, and the
establishment of mine rescue and recovery teams
including the procurement of rescue equipment
necessary in cases of emergencies such as landslides,
tunnel collapse, or the like.
The fund shall also be made available to address the
needs of the small-scale miners brought about by
accidents and/or fortuitous events.
Sec.  21. Rescission of Contracts and Administrative
Fines. — The noncompliance with the terms and
conditions of the contract or violation of the rules and
regulations issued by the Secretary pursuant to this Act,
as well as the abandonment of the mining site by the
contractor, shall constitute a ground for the cancellation
of the contracts and the ejectment from the people's
small-scale mining area of the contractor. In addition,
the Secretary may impose fines against the violator in
an amount of not less than Twenty thousand pesos
(P20,000.00) and not more than One hundred thousand
pesos (P100,000.00). Nonpayment of the fine imposed
shall render the small-scale mining contractor ineligible
for other small-scale mining contracts.
Sec.  22. Reversion of People's Small-scale Mining Areas.
— The Secretary, upon recommendation of the director,
shall withdraw the status of the people's small-scale
mining area when it can no longer feasibly operated on
a small-scale mining basis or when the safety, health
and environmental conditions warrant that the same
shall revert to the State for proper disposition.
Sec.  23. Actual Occupation by Small-scale Miners. —
Small-scale miners who have been in actual operation
of mineral lands on or before August 1, 1987 as
determined by the Board shall not be dispossessed,
ejected or removed from said areas: Provided, That
they comply with the provisions of this Act.
Sec.  24. Provincial/City Mining Regulatory Board. —
There is hereby created under the direct supervision
and control of the Secretary a provincial/city mining
regulatory board, herein called the Board, which shall
be the implementing agency of the Department, and
shall exercise the following powers and functions,
subject to review by the Secretary:
(a) Declare and segregate existing gold-rush areas for
small-scale mining;
Department shall provide the staff support to the
Board.
Sec.  26. Administrative Supervision over the People's
Small-scale Mining Program. — The Secretary through
his representative shall exercise direct supervision and
control over the program and activities of the small-
scale miners within the people's small-scale mining
area.
The Secretary shall within ninety (90) days from the
effectivity of this Act promulgate rules and regulations
to effectively implement the provisions of the same.
Priority shall be given to such rules and regulations that
will ensure the least disruption in the operations of the
small-scale miners.
Sec.  27. Penal Sanctions. — Violations of the provisions
of this Act or of the rules and regulations issued
pursuant hereto shall be penalized with imprisonment
of not less than six (6) months nor more than six (6)
years and shall include the confiscation and seizure of
equipment, tools and instruments.

(b) Reserve future gold and other mining areas for

small-scale mining;
(c) Award contracts to small-scale miners;
(d) Formulate and implement rules and regulations
related to small-scale mining;
(e) Settle disputes, conflicts or litigations over
conflicting claims within a people's small-scale mining
area, an area that is declared a small-mining; and
(f) Perform such other functions as may be necessary to
achieve the goals and objectives of this Act.
Sec.  25. Composition of the Provincial/City Mining
Regulatory Board. — The Board shall be composed of
the Department of Environment and Natural Resources
representative as Chairman; and the representative of
the governor or city mayor, as the representative of the
governor or city mayor, as the case may be, one (1)
small scale mining representative, one (1) big-scale
mining representative, and the representative from a
nongovernment organization who shall come from an
environmental group, as members.

The representatives from the private sector shall be

nominated by their respective organizations and
appointed by the Department regional director. The